Why might you owe tax?
A tax bill generally means the credits and tax already withheld or paid during the year were not enough to cover the final amount calculated after your income and other applicable tax items were considered.
Why do I owe tax instead of getting a refund?
Many workers expect a refund simply because tax was taken from their wages throughout the year. PAYG withholding, however, is tax collected progressively from payments such as salary and wages. Your tax return then works out your actual annual tax position.
If the total amount withheld and other applicable credits exceeds the final amount payable, you may receive a refund. If not enough was withheld or paid, you may receive a tax bill for the difference.
1. You worked two or more jobs
This is one of the most important issues for workers with multiple sources of employment income. Each employer withholds tax based on the information available to that payer. Your tax return, however, looks at your combined income.
If you have more than one payer at the same time and expect your total income to exceed the tax-free threshold, the ATO generally says you should claim the tax-free threshold from only one payer, usually the payer paying the highest salary or wage.
Suman works part-time during the week and also takes casual weekend shifts. Both jobs contribute to his total annual income. If the combined PAYG withholding is less than the tax ultimately calculated on his total taxable income and other applicable amounts, he may have a tax bill even though tax was withheld from his pays.
2. You claimed the tax-free threshold from multiple employers
Australian residents for tax purposes are generally entitled to the $18,200 tax-free threshold. But this does not mean you normally claim a separate $18,200 threshold from every employer.
Where you have multiple simultaneous payers and expect to earn more than $18,200 in total, claiming the threshold from more than one payer can mean too little tax is withheld across the year.
3. You earned ABN or side-hustle income
If you operate as a genuine sole trader or earn business income under an ABN, tax may not be withheld from each payment in the same way it normally is from employee wages.
This can mean you receive more cash during the year but still need to account for income tax when your return is prepared. Depending on your circumstances, PAYG instalments may also become relevant.
Rita works as an employee during the week and earns additional genuine sole-trader income on weekends. Her employer withholds tax from her salary, but her business clients may not withhold income tax from her ABN payments. The business profit can therefore increase her taxable income and contribute to an amount owing.
4. You received bank interest or investment income
Income can come from more than employment. Bank interest, dividends, investment distributions and other assessable investment income may increase your taxable income.
Where sufficient tax has not already been withheld or otherwise paid in relation to that income, it can contribute to an end-of-year tax bill.
5. Your deductions were lower than you expected
A deduction is not the same as a dollar-for-dollar cash refund. Eligible deductions generally reduce taxable income; they do not simply return the full amount you spent.
For work-related expenses, the general ATO rules include that you must have spent the money yourself without reimbursement, the expense must directly relate to earning your income, and you must have records to prove the claim.
If an expense is partly private, only the eligible work-related portion can generally be claimed.
6. You have a study or training support loan
If you have an Australian study or training support loan and your repayment income reaches the applicable threshold, compulsory repayment rules can affect your final tax assessment.
Multiple employers can make withholding for these obligations more complicated because each payer may only see what they individually pay you rather than your combined income.
The thresholds and repayment rules can change between income years, so current ATO figures should be checked when preparing the return.
7. Medicare levy may affect the final amount
The Medicare levy can form part of an individual's final tax assessment where it applies. Eligibility for reductions or exemptions depends on the person's circumstances.
This is another reason the tax withheld from wages should not automatically be treated as the final amount of tax and related liabilities for the year.
8. Your income increased during the year
You may start the year with low hours and later move into a higher-paying role, receive more shifts, work overtime or add another income source.
Your final annual income can therefore be quite different from what you expected earlier in the year.
Changing from casual to part-time or full-time does not restart the tax year. Income earned across the entire financial year is considered.
9. You changed jobs during the financial year
Changing employers does not remove the income from your earlier job. Salary and wages from both the old and new employer are generally considered in the same financial year's return.
You can generally claim the tax-free threshold from a new employer after the previous employer stops paying you. Problems are more likely where multiple employers are paying you at the same time and withholding does not adequately cover your combined position.
10. You are a casual worker with changing income
Casual workers can have irregular hours, penalty rates, weekend shifts, overtime and multiple employers. These variations can make it harder to estimate annual income and expected tax.
There is not a separate final "casual tax rate". Your casual wages, loadings and other taxable employment payments form part of the income considered in your return.
11. Weekend, night-shift or overtime pay increased your income
Penalty rates, shift loadings and overtime can increase your gross salary and wages. These amounts are generally taxable.
A larger amount being withheld from a high-pay period does not necessarily mean that weekend or night work has its own separate final tax rate.
Tax refund vs tax bill: what actually happens?
| Situation | What it can mean | Possible result |
|---|---|---|
| More tax withheld / credits than final liability | You have paid more toward the assessment than ultimately required. | Potential refund, subject to the full assessment and any applicable offsets or debts. |
| Less tax withheld / paid than final liability | Your prepayments do not fully cover the assessment. | Tax bill for the difference. |
| Multiple jobs | Each payer withholds separately while the return considers combined income. | Refund or bill depending on total withholding and final liability. |
| ABN / business income | Income tax may not have been withheld from payments. | Can contribute to an amount owing. |
| Investment income | Additional assessable income may have little or no withholding. | Can increase final tax payable. |
| Eligible deductions | Reduce taxable income rather than operating as dollar-for-dollar refunds. | Can reduce tax payable, subject to the applicable rules. |
"But my employer already took tax from every payslip"
This is one of the most common sources of confusion. The amount shown as tax withheld on a payslip is an amount paid toward your tax position.
It is not necessarily a guarantee that exactly the right amount has been collected for your entire financial year.
Your employer does not necessarily know about income from another job, sole-trader activity, bank interest, investments or other circumstances that can affect your assessment.
Does a second job get taxed more?
You do not have a separate final income-tax rate simply because income came from a second job.
However, withholding can look higher because the tax-free threshold is generally claimed from only one payer.
When your return is lodged, income from your jobs is brought together and the final tax position is calculated based on the applicable rules.
Can deductions turn a tax bill into a refund?
Legitimate deductions can reduce taxable income and therefore may reduce the amount of tax payable.
But deductions should never be invented or inflated simply to try to create a refund.
A claim must satisfy the relevant deduction rules. For work-related expenses, this generally means you incurred the expense yourself, it directly relates to earning your income, and you have the required evidence.
What should you check if your estimated refund becomes a tax bill?
- Check whether all relevant income statements are correct and marked Tax ready.
- Check whether you had two or more employers at the same time.
- Review where you claimed the tax-free threshold.
- Check ABN, sole-trader, freelance or platform income.
- Review bank interest, dividends and other investment income.
- Check whether a study or training support loan applies.
- Consider whether Medicare levy rules affect you.
- Review deductions and remove private or unsupported claims.
- Check PAYG tax withheld across all employers.
- Review whether other relevant tax debts or credits affect the amount payable.
Can you prevent another unexpected tax bill?
If too little tax is being withheld, taxpayers may be able to arrange for additional amounts to be withheld where appropriate.
For people with multiple payers, correctly completing TFN and withholding declarations can help the withholding position better reflect the overall circumstances.
If you earn genuine sole-trader or other income without withholding, putting money aside for tax and understanding whether PAYG instalments apply can also help with cash flow.
What if the ATO tax bill looks wrong?
Do not assume the amount is correct or incorrect without checking the underlying information.
Compare your income statements, tax withheld, other income, deductions and applicable tax items with the return or notice of assessment.
If information reported by an employer, bank or another payer appears incorrect, investigate the source of the discrepancy. If the return itself contains an error, an amendment may be required.
What if you cannot pay the tax bill immediately?
Do not ignore an ATO debt. Payment options and payment plans may be available depending on your circumstances.
Interest can apply to unpaid tax debts. General interest charge and shortfall interest charge incurred on or after 1 July 2025 are no longer deductible.
Check current ATO payment information or speak with a registered tax professional if you need help understanding your options.
Tax-bill checklist for Nepali workers and students
- Gather income statements from every employer.
- Confirm your Australian tax residency position.
- Check your tax-free threshold declarations.
- Add all employment income.
- Review genuine ABN and sole-trader income.
- Check interest and investment income.
- Review eligible deductions and supporting records.
- Check PAYG withholding amounts.
- Review study or training support loan obligations if applicable.
- Consider Medicare levy rules and any relevant exemption or reduction.
- Compare the final assessment with tax already withheld or paid.
- Seek professional advice where the result is unclear.
Frequently asked questions
Received an unexpected tax bill?
Hamro Accountant can help review your employment income, multiple jobs, ABN income, deductions, withholding and other relevant tax-return information.
General information only: This article provides general Australian taxation information and is not personal tax, financial or legal advice. Your final tax outcome depends on your individual circumstances, residency, income, deductions and other applicable rules. Check current ATO guidance or obtain advice from a registered tax professional before acting.